Granny flats - the risks homeowners need to consider
The Government's new 'granny flat' rules, which came into force on 15 January 2026, have been widely promoted as a win for property owners and housing supply.
Small standalone dwellings can now be built without some of the consents that previously applied, making it a simpler, low-cost process according to the narrative from Building Minister Chris Penk and Housing Minister Chris Bishop.
However, for property owners, the reality is far more complicated - and risky.
Rather than removing regulation the reforms effectively shift it. Where councils once checked compliance through formal consent processes, much of that responsibility - and risk - is now on homeowners themselves.
If you misunderstand the rules or miss a requirement, the consequences are no longer caught early. They arrive later, and they arrive expensively. This risk is also transferred in theory to the builder/designer with the safety net supposedly being implied warranties, builder's insurance and professional indemnity insurance.
The new pathway relies on exemptions under the Building Act and the National Environmental Standard for Detached Minor Residential Units (NES-DRMU). These exemptions are narrow and highly conditional. Councils still review applications through the Project Information Memorandum (PIM) process - but there is no formal approval. A PIM does not authorise construction. It simply provides information.
That matters. A PIM does not certify compliance or protect property owners from liability. It flags potential issues and leaves it to the applicant to identify, interpret and act on them correctly. Miss one, and the risk sits squarely with the property owner.
The issues commonly identified in a PIM are not minor technicalities. They can include building over boundaries, exposure to natural hazards, infrastructure requirements, development contributions, covenants or easements, and the need for resource consent under other national standards - such as contaminated land rules. Any one of these can derail a project or push it back into a full consent process after construction has already started.
The exemption does not apply to extensions, alterations or relocated buildings that existed before 15 January 2026. Assuming an older structure can be brought under the new rules is a compliance failure waiting to happen.
Even where a granny flat meets exemption criteria, the applicant needs to tick the building process regulations. All work must comply with the New Zealand Building Code and be carried out by Licensed Building Practitioners (LBPs). Work is deemed completed only when owners receive Certificates of Work, Records of Work from the LBPs, registered plumbers/drainlayers, and electrical and gas certification, and final design documentation.
From that point, strict timeframes apply. Applicants have 20 working days to pay the development contributions, if required.
Failure to get the documentation and pay the development contribution will trigger problems such as the lapsing of the PIM after 12 months from issue; likely enforcement after this point resulting in requirement to 'legalise' the work which may require lodging COA and /or building consent - costly, uncertain and stressful processes.
Long-term consequences can be even more troubling. Non-compliant buildings may create insurance problems, complicate financing, or surface years later during a property sale, when lawyers and valuers uncover missing documentation or regulatory breaches.
Granny flats can still be a valuable housing option. But property owners should go into this process with eyes wide open. Read the MBIE guidance carefully. Choose Licensed Building Practitioners wisely. Scrutinise the PIM and act on every issue it raises. And when in doubt, talk to your local council to ensure you understand ALL the rules - not after.
Under the new rules, granny flats may be easier to start - but they are far easier to get wrong.
By Karel Boakes (BOINZ President)
